Shares of Shree Cement dropped 4% on Tuesday to an intraday low of Rs 23,500.15 on the BSE after the Kolkata-based company’s Q2 profit plunged more than 80% on year to Rs 93.13 crore.The profit was weighed down by weakness in both demand and prices for the building material during the three months.While the September quarter is seasonally weak for cement makers, the country’s third-largest producer’s sales volume slipped as compared to the previous year as well - 7% lower at 7.60 million tonnes.The company’s net revenue from operations fell 18% on year to Rs 3,727 crore, while earnings before interest, tax, depreciation, and amortization fell 32% on year to Rs 593 crore.After the second quarter results, here is what analysts say:HDFC Securities: Add | Target price: Rs 26,700The fuel cost is expected to gradually cool off by 12% from Q2FY25 levels in the next three quarters. The company expects a Capex of Rs 4,000 crore each year for the next four years. Management plans to commission 14mn MT cement capacity in Q1FY26 to reach 70mn MT.Cement NSR fell only 0.4% QoQ, lower vs peers owing to a rise in trade sakes QoQ. Unit opex went up 2% QoQ, mainly on op-lev loss. Thus, unit EBITDA fell INR 170/MT QoQ to INR 780 per MT (down INR 280/ MT YoY.Motilal Oswal: Neutral | Target price: Rs 23,910A few strategic changes, such as a focus on brand equity and product premiumization, are near-term hurdles in gaining market share despite capacity expansions.The company reinstated a few previous brands, such as Roofon, under the premium category, and Shree Jungrodhak under the master brand Bangur, which also led to uncertainties over the company’s marketing strategies. Motilal Oswal continues to believe most of the company’s expansions focus on existing markets (North, East, and part of South), while a large part of Central India and West will remain untapped until FY27E.Also read: KPI Green Energy to consider bonus issue, stock split on November 14Nuvama: Hold | Target price: Rs 25,437The company’s capex plan shall help deliver sustained volume growth while cost efficiency measures would allow it to sustain cost leadership in the cement industry. However, the weak pricing environment compels us to slash FY25E/26E/27E EBITDA by 9%/6%/5%.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
- News Source Indiatimes (Click to view full news): CLICK HERE
0 Comments:
Leave a Reply